II CARACTERIZACIÓN DEL MEDIO FÍSICO CASO ACUÍFERO PUERTO LIBERTAD II.1 ESTUDIOS PREVIOS
II.6 SUELOS Y VEGETACIÓN EN LA CUENCA PUERTO LIBERTAD 1 Características del suelo
The consolidated financial statements for the ‘Group’ are for the economic entity comprising The New Zealand Refining Company Limited (‘parent’ or ‘Company’) and its subsidiary, Independent petroleum Laboratory Limited. The New Zealand Refining Company Limited is incorporated in New Zealand, registered under the Companies Act 1993 and is an issuer pursuant to the Securities Act 1978. The registered office is marsden point, Whangarei, New Zealand. The parent and the Group are designated as profit oriented entities for financial reporting purposes.
These financial statements were approved by the Directors on 17 February 2011.
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation of financial statements
basis of preparation
These financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 1993 and the Companies Act 1993. In accordance with this legislation, these financial statements comply with Generally Accepted Accounting practice in New Zealand and the New Zealand equivalents to the International Financial Reporting Standards (‘NZ IFRS’). These financial statements also comply with International Financial Reporting Standards. The historical cost convention, as modified by the revaluation of certain assets and liabilities as indicated in the specific accounting policies below, has been adopted during the preparation of these financial statements. These financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000), unless otherwise stated.
Critical accounting estimates and judgements
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise their judgement in the process of applying the Group’s accounting policies. estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
In the process of applying the Group’s accounting policies, the following areas involve judgement and assumptions that can significantly affect the amounts recognised in the financial statements:
(i) Property, plant and equipment
judgements have been made in relation to the Group’s depreciation rates as per note 1 (o).
(ii) Defined benefit pension plan obligation
The present value of the defined benefit pension plan obligation depends on a number of factors that are determined by an independent actuary using a number of assumptions. The assumptions include the expected return on plan assets, the expected rate of salary increases, mortality in retirement and an appropriate discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.
These assumptions are determined by the independent actuary and are disclosed in note 12.
(iii) Fair value of investment property
The Group remeasures the value of its investment property to fair value each year. The fair value is estimated by an independent valuer which reflects market conditions at the balance sheet date. Changes to market conditions or to the assumptions made in the estimation of fair value will result in changes to the fair value of the investment property. The carrying value of the investment property and the valuation methodology is disclosed in note 10.
The New ZealaNd refiNiNg compaNy limiTed
Notes to the financial Statements
For the Year ended 31 december 2010
Notes to the financial Statements
For the Year ended 31 december 2010
1 Summary of Significant accounting policies cont.
(h) leases
Leases in which a significant portion of risks and rewards of ownership are retained by the lessor are classified as operating leases. payments made under operating leases (net of any incentives received from the lessor) are charged to the Income Statements on a straight-line basis over the period of the lease.
When assets are leased out under an operating lease, the asset is included in the balance Sheets as property, plant and equipment. Lease income is recognised over the term of the lease on a straight-line basis.
(i) Impairment of assets
(i) Financial assets – Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
• Significant financial difficulty of the issuer or obligor;
• A breach of contract, such as a default or delinquency in interest or principal payments;
• For economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower
a concession that the Group would not otherwise consider;
• It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
• The disappearance of an active market for that financial asset because of financial difficulties; or
• Observable data indicating that there is a measurable decrease in the estimated future cash flows
from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:
(i) A diverse change in the payment status of borrowers in the portfolio; and
(ii) National or local economic conditions that correlate with defaults on the assets in the portfolio. The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate and is recognised in the Income Statements.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the Income Statements.
(ii) Non-financial assets
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the Income Statements for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
(j) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. bank overdrafts are shown within current liabilities on the balance Sheets.
1 Summary of Significant accounting policies cont.
(e) Foreign currency translation
(i) Functional and presentation currency
The financial statements are presented in New Zealand dollars, which is the parent’s and the Group’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statements, except when deferred in other comprehensive income as qualifying cash flow hedges.
(f) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable in the ordinary course of the Group’s activities for the sale of goods and services, excluding Goods and Services Tax (‘GST’) after eliminating sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below:
(i) Processing fee (oil refining)
The processing fee is recognised when the Group has processed products for the customer.
(ii) Pipeline fee (distribution)
The pipeline fee is recognised when the products have been transferred to the Wiri Oil terminal in South Auckland.
(iii) wiri Oil terminal rental
Rental income from operating leases is recognised on an accruals basis in accordance with the substance of the relevant agreements and in accordance with note 1 (h).
(iv) Interest income
Interest income is recognised on a time proportion basis using the effective interest method.
(v) Government Grants
Any carbon credits received in the form of New Zealand units (NZus) from the New Zealand Government are recognised as intangible assets on receipt (refer note 1 (q)). Income associated with these NZus is recognised in the Income Statements over the period in which the Group recognises as expenses the cost that the units relate to.
(g) Income tax
The income tax expense for the year is the tax payable on the current year’s taxable income based on the New Zealand income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax assets or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
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Notes to the financial Statements
For the Year ended 31 december 2010
Notes to the financial Statements
For the Year ended 31 december 2010
1 Summary of Significant accounting policies cont.
Recognition and measurement
A financial asset or liability is recognised if the Group becomes a party to the contractual provisions of the asset or liability. Regular purchases and sales of financial assets and liabilities are recognised on the trade-date, which is the date on which the Group commits to purchase or sell the asset or liability. A financial asset or liability is recognised initially at its fair value plus, in the case of a financial asset or liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the instrument. Financial assets and liabilities carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the Income Statements.
After initial recognition, financial assets are measured at their fair values except for loans and receivables which are measured at amortised cost using the effective interest method. After initial recognition, financial liabilities are measured at amortised cost using the effective interest method except for financial liabilities at fair value through profit or loss. The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be reliably estimated. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the Income Statements.
In the separate financial statements of the parent, investments in subsidiaries are stated at cost, less any impairment. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.
(n) Derivative financial instruments and hedging activities
The Group uses forward exchange contracts to hedge certain capital purchases and interest rate swaps.
These derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as either:
(a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or
(b) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.
(i) Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Income Statements, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
(ii) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statements.
Amounts accumulated in equity are recycled in the Income Statements in the periods when the hedged item affects profit or loss.
however, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, property, plant and equipment), the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in the Income Statements (for example, as depreciation).
1 Summary of Significant accounting policies cont.
(k) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less impairment.
Collectability of trade receivables is reviewed on an ongoing basis. Debts, which are known to be uncollectible, are written off. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the average cost of capital. The amount of the provision is recognised in the Income Statements.
(l) Consumable stores and spares
Inventories of materials and supplies are stated at the lower of cost or net realisable value. Cost comprises the cost of the materials and supplies using weighted average cost.
(m) Financial assets and liabilities
Classification
The classification of financial assets and liabilities depends on the purpose for which the financial assets were acquired. management determines the classification of its financial assets and liabilities at initial recognition. Financial assets are classified on initial recognition into the following categories: at fair value through profit or loss, loans and receivables, and available-for-sale financial assets. Financial liabilities are classified as either at fair value through profit or loss, or financial liabilities measured at amortised cost. The Group has not had any available-for-sale financial assets in the periods covered by these financial statements.
(i) Financial assets and liabilities at fair value through profit or loss
Financial assets and liabilities at fair value through profit or loss are financial assets held for trading or designated as fair value through profit and loss. Derivatives are also categorised as held for trading unless they are designated as hedges.
(ii) loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and cash equivalents’ in the balance Sheets.
(iii) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the asset within 12 months of the balance sheet date.
(iv) Financial liabilities measured at amortised cost
Financial liabilities measured at amortised cost are non-derivative financial liabilities with fixed or determinable payments that are not quoted in an active market. Trade and other payables and borrowings are classified as financial liabilities measured at amortised cost.
The New ZealaNd refiNiNg compaNy limiTed
Notes to the financial Statements
For the Year ended 31 december 2010
Notes to the financial Statements
For the Year ended 31 december 2010
1 Summary of Significant accounting policies cont.
(p) Investment property
Investment property comprises land held for long-term rental yields that is not occupied by the Group. Investment